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Silver Member

OK so let me try to explain what I mean. If bull run for gold has to run estimated run of 12000 - 15000$ an ounce and if that would be achieved in major five waves, than they could be ONE, THREE and FIVE as impulsive waves and TWO and FOUR as corrective waves. LOOK at gold chart in line form on monthly chart, you will see only three significant top, since year 2000. I look at is tops of 1st, 3rd and 5th waves of MAJOR ONE. If that is so gold should be in for major correction. This being US presidential year everyone is aware of his first love......stock market..

Silver Member

OK so let me try to explain what I mean. If bull run for gold has to run estimated run of 12000 - 15000$ an ounce and if that would be achieved in major five waves, than they could be ONE, THREE and FIVE as impulsive waves and TWO and FOUR as corrective waves. LOOK at gold chart in line form on monthly chart, you will see only three significant top, since year 2000. I look at is tops of 1st, 3rd and 5th waves of MAJOR ONE. If that is so gold should be in for major correction. This being US presidential year everyone is aware of his first love......stock market..

Dlod I can see that as a possible count. I think we will see very soon. Great thing about waves is you know pretty quickly when your top count is wrong. One thing I've learned is patients until things clarify.

Seeker

I'm thinking maybe a couple few years like around 2014-2015 but who knows. At that point I will have hopefully put together some extra capital. Ready in a few years to wrap it up retire down South and play golf while I am not busy with the part time job. Cheap big a$$ house.

So your plan is to sell your metals and put all the money into a house? I already have a house. Anything else you'd recommend putting that money into? I've been thinking about buying as much acreage as I can with my pm money. Just because I don't trust retirement accounts and obviously holding FRNs is not a good idea.

I honestly have no clue where to put my capital once metals are overvalued. Maybe sell at the top, hold the FRNs, buy metals again when they come down?

Silver Member

If I am truly following Alf Fields' count than we have finished WAVE 1 from 254 - 1032 which retraced 44.3% to 681, This wave is WAVE III's 1st wave and it has begun from 681 if that is to retrace to than the 38.2% retracment could be 1447.77 and second could be 1360.96 at 44.1 %.

If I consider your wave count from 1309 - 1925 than already gold has retraced more than 44.1%, which is at 1650ish. Gold has retraced to 1628.14.

Silver Member

On May 14, this is precisely what occurred. Both May and July silver are backwardated. And June gold is backwardated. Incredibly, the May silver contract is giving away a 3% annualized profit to anyone who would sell physical silver and buy a May future that delivers in a few weeks (thus recovering the same position). Even more incredibly, no one can or will take the profit that is dangling out there!

July silver backwardation is smaller, and June gold backwardation is even smaller. But still! This should not be possible at all.

Because the next successive contracts are not in backwardation (in silver, all contracts from Jul 2015 on are backwardated), it is not a collapse of trust. I think that it is a lack of unencumbered metal. The markets for precious metals, silver more than gold, have become quite tight.

Silver Member

Some €700m per day is being pulled from Greek banks. Global stock markets have fallen over 7% already this month, the broad commodity markets have fallen for 10 out of 11 days, and crude oil is trading at a 6-month low, down 15% from February.

Yet the distinct attributes of gold – un-inflatable, economically useless (relatively speaking) incorruptible gold, with its zero credit risk and 5,000 years of monetary use – count for nothing. In Dollar and Sterling terms, it's now back where it started last summer's big move.

It's like summer 2011 never happened...

That's precisely what happened in late 2008, when the collapse of Lehman Bros. – and the missed opportunity to let every other over-leveraged investment fraud go bust as well – drove equities, commodities and gold sharply lower.

By mid-October 2008, gold had re-traced the entire surge that started with Bear Stearns' hedge-fund failures of mid-2007, running to the peak above $1000 per ounce when Bear Stearns itself failed into the loving embrace of J.P.Morgan the following March.

Here again in 2011-2012, the crisis proved good for gold at first, but the whole move has been unwound as global credit deflation sucked the air out of gold futures and options, and wipe-out losses in other assets forced even true believers to quit their positions.

Gold prices have the potential to recover, reckons a UBS analyst on Bloomberg TV. No doubt he's right. But how strong is gold's immediate potential given the overwhelming bullishness of every other tomfool able to voice his opinion in public.

"Last time we talked, last September or October, you asked what I thought, and I was bullish at $1800," said one MBA with the certainty of a 12-year old to Business Insider a week ago.

Gold supply remains modest, as mine production and recycled gold supplies increased 5 percent on a year-over-year basis. Mine production alone increased only 2 percent over the previous year, says the WGC, which follows the trend over the past four years. Mr. Grubb says he sees the trend continuing that older mines in South Africa are declining in production, and the higher-than-average production is coming from China, West Africa, Turkey and parts of Asia.

Overall, Mr. Grubb believes a high level of recycling is required as mine production only meets 2,800 tons of demand. Total demand for gold in 2011 reached 4,500 tons! The only way to balance the supply with the demand: keep an elevated gold price.

Okayama Metal & Machinery has become the first Japanese pension fund to make public purchases of gold, in a sign of dwindling faith in paper currencies. Initially, the fund aims to keep about 1.5 per cent of its total assets of Y40bn ($500m) in bullion-backed exchange traded funds, according to chief investment officer (CIO) Yoshisuke Kiguchi, who said he was diversifying into gold to “escape sovereign risk”.

Pension funds and gold bullion

Traditionally pension funds have ignored gold due to their focus on yields. Japan is the world’s second largest pension market, and this move by Okayama Metal & Machinery is worth paying close attention to. Such a move into non-yielding assets becomes more palatable in a world of negative real interest rates where institutional investors are paying for the ‘privilege’ of holding government paper.

This week our friend the British economist Alasdair Macleod presented what he modestly called two "lectures" about gold at the Hard Assets Investment Conference in New York. The "lectures" are actually the equivalents of state papers -- the latter one a masterful and detailed description of the mechanics of the gold price suppression scheme. A few excerpts from that lecture:

It is the leasing activities and other unannounced interventions that are not reflected in central bank gold accounts, the former because in a leasing agreement ownership remains with the lessor so it is not reported, and the latter because they are hidden by the sight account system. The logical conclusion is that 30 years of supplying gold to the market to keep gold well below its free-market value has depleted official gold reserves to a significant degree. And since central banks refuse to discuss the matter, we have no idea how much of the officially declared gold actually exists. The International Monetary Fund's gold is likely to be held on a sight basis in its entirety. When the IMF disposed of 400 tonnes between 2009 and 2010, they turned down bids from the private sector, selling only to other central banks. I believe this gold was in sight accounts (that is, did not actually exist), so a condition of sale was that it could be transferred and held only between central banks and supra-national government organisations. This certainly seems likely, but the sale terms were never actually made public.

So, to summarise: The central banks at the heart of price manipulation have had the means to sell substantial amounts of bullion without having to account for it. ...

London Bullion Market Association members strongly encourage clients to hold unallocated accounts by charging little or no fees for the privilege. They discourage clients from holding allocated accounts by charging high storage and custody fees. There are very good reasons why this is so. They are unable to make use of allocated gold, whereas every ounce of unallocated gold is used to back the LBMA members' dealings in the market. The disadvantage to the client is that he is exposed to counter-party risk.

Now if you have looked recently at the balance sheets of some of the European banks, you may not wish to take that risk. So while there has never been a bankruptcy in the market (though there have been some covert rescues -- for example, the one I mentioned earlier which [former Bank of England Governor] Eddie George talked about), implying that unallocated accounts are safe, for many clients this is not an assumption they are prepared to accept anymore.

The money in the [gold] market is always unbalanced in favour of the commercial bullion banks. They have lots of money, even your money as a taxpayer if they are too big to fail, and can always bluff anyone not prepared to put up funds for delivery. This is because the non-commercials and speculators have geared positions, which will magnify their losses.

We see this happening time and time again. The big commercial bullies wait for the punters to build up their long positions and then they whack it hard. They know that by doing so they will trigger all those stop-losses. In an afternoon they can make $100 an ounce this way. They make lots more money trading this way than they lose from being continually short in a bull market. You have been warned!

In the chart above I have derived from disaggregated data the net positions of the swap dealers. Two years ago they were short a net 120,000 contracts, which is the equivalent of 373 tonnes of gold. Since March 2011 they have reduced their net shorts from -110 thousand to zero give or take at the peak of the gold market last September. At the same time open interest fell from a peak 650,000 in November 2010 to the 420,000 level.

Why were the swaps short? The only logical reason has to be that the central banks were supplying the market with physical. It is that extra physical that was being hedged two years ago. And what is interesting is that at that time Portugal was rumoured to have given its gold up as collateral to the Bank for International Settlements. The amount that actually showed up in the BIS accounts was 349 tonnes, and the date was late 2009. Fits perfectly! Put another way, Portugal's entire gold stock appears to have been sold and absorbed into the market.

The balance of power has shifted to Asia, particularly China, and central to that power is control of real money, the money that society chooses for itself, not that enforced by government as a monopoly upon us. Untold amounts of gold have disappeared from the advanced economies' central banks, and the London Bullion Market is exposed to a sharp rise in the gold price. With this knowledge, anyone who does not take steps to protect him or herself from the increasingly certain event, a collapse in paper money, a fundamental change in our whole economic paradigm, is nuts.

Silver Member

Gold's COT chart reveals that the Commercials have scaled back their short positions to their lowest levels for the period shown by this chart, which dates back to last August, and they are thus at lower levels than those at the lows of last September and last December. By itself this is clearly a bullish indication, and here we should note that the latest COT chart for silver is much more startlingly bullish. This is a reliable sign that we may well have just seen the bottom for this cycle.

As we know, the dollar has capitalized handsomely on the euro's predicament, and it has soared in recent weeks, despite the grave and appalling state of affairs prevailing in the US with regards to its own debt situation. On its 6-month chart we can see that after breaking out from a Triangle pattern the dollar index has staged a very impressive rally to arrive at a first target at the resistance at its January highs in a critically overbought state short-term, which is why we have been looking for it to stall out and possibly react back, and as pointed out above the Commercial's huge long position in the euro makes a reaction morte likely.

On the other hand, the 1-year chart for the dollar shows that it has the potential, after digesting its recent gains, to run to the top of the large trend channel shown on the chart, which means it could get as high as 85 - 86. Should this occur it is obvious that it will be very bad news indeed for the markets, as such a development would involve the forces of deflation bursting onto center stage

The most important point to take note of at this juncture is that we have an exceptionally favorable risk/reward profile for those going long gold and silver here, as the strong support at the September and December lows has just been validated by last week's strong bounce off it - so you can buy here and set either intraday or closing stops beneath it, and it will be even better if prices react back towards last week's lows again in the near future. If the deflationary scenario prevails near-term you get taken out for a minor loss. If it becomes obvious that the huge QE is in the pipeline, then both gold and silver will soar, and the upside from here is relatively unlimited - and the COTs are pointing to this scenario prevailing.

The macro-economic conditions that have supported gold's bull run over the past decade have not changed; in fact, they've become progressively worse. This is the calm before the storm, and last week's intra-day low of US$1,535 an ounce may well have been a bottom.

In Europe, a good storm-watch indicator is the Bloomberg Europe 500 Banks and Financial Services Index - down around 35 percent over the last year. In the United States, according to a recent interview with Lakshman Achuthan, COO of the Economic Cycle Research Institute (ECRI), "The question is not whether there will be a [US] recession, but when there will be a recession. We are very clearly on record for forecasting a recession to start by the middle of this year."

Gold is universally under-owned by everyone, including institutional portfolio and pension fund managers (Figure 2). Pension fund managers have a fiduciary responsibility to meet liabilities. They use asset allocation to achieve diversification in order to reduce risk, maximize performance and thus responsibly manage their funds. To ignore the best-performing asset class year after year could conceivably expose managers and trustees to legal liabilities (Figure 3).

In a recent Capitol Hill hearing, Treasury Secretary Timothy Geithner was asked: If he could request just one final debt ceiling increase, how much would it be? "It would be a lot," he said. "It would make you uncomfortable." The Treasury Department's own projections have US debt at $23 trillion by 2015 - a 64 percent increase to the current debt limit. Given gold's close correlation to US government debt, a gold price in the $2,750 range in two to three years' time seems to be a worst-case scenario. Now is the time to buy gold, not to sell.

Silver Member

The technical evidence suggests that today's spike (ie June 1st) in the gold price was more probably a technical upward reaction within a secondary bear trend than the commencement of a strong up move.

This chart is signalling an upside target for the gold price of $1820, with "timing" not possible to anticipate

With Point & Figure charting, there are two ways to estimate price destination following a breakout:

Vertical count (flowing from prior volatility and the number of blocks in a vertical column move)
Horizontal count (following a consolidation pattern and based on the maximum number of blocks in a horizontal line)

Over the years I have come to understand that the vertical count system works best with the trend and the horizontal count technique works best against the trend. So the question arises as to whether, on this particular occasion, the vertical count upside target is more relevant that the horizontal count upside target of $1630 that was reached today.

There is no question that gold is in a "primary" bull trend, but the question arising from the chart below is whether gold may have entered a secondary bear trend when it broke below the rising trend line four weeks ago.

Why is this important? Because, if gold is in a secondary bear trend, then the horizontal count target will be the more relevant target.

If we look at the period from January to October 2008 on Chart #2 above, we see that facts 1-3 were precisely the same at that time, and that the PMO was even in negative territory, and that the gold price started to rise strongly in January/February 2009. It entered a rising trend after it broke up through resistance of an ascending right angled triangle.

The key difference between these two formations is as follows:

The "consolidation" during 2008 occurred in the form of a "pennant" pattern, which is typically bullish. By contrast, a descending right angled triangle is typically bearish.

Below is a chart reproduced from "Technical Analysis of Stock Trends, Edwards and Magee, 1977 at page 110. It shows a break down from a descending right-angled triangle, a pullback following the break, and then a continuation of the confirmed bear trend:

In addition to the downside penetration of the rising trend line, what seems most relevant about this chart is that the PMO has given a second sell signal from a double top. It follows that, for the gold price to rise to new highs in the foreseeable future, two strongly bearish signals will need to be overcome. Importantly, a "sell" signal on an oscillator does not necessarily mean that the price will fall. It might mean that the price will stop rising and churn sideways. But, as I see it, the "angle of incline" of the gold price's rise (the rate at which it was rising) was so steep as to be unsustainable. The gold price had reached a point where it would either have had to enter an exponential blow-off phase or it would have had to consolidate for many months. The above chart points to consolidation - which is why the secondary trend is probably bearish; and which is why today's sharp rise in the gold price was probably a knee jerk reaction.

This conclusion is validated by the less sensitive P&F chart below, which is showing that the $1109 target still prevails - within a Primary Bull Trend.

However, given that the Primary Trend is bullish, the horizontal count target (consolidation) is more relevant, and this implies that the target (following a break below $1535) will be $1320.

Now, the rise from $1076 to $1888 formed what is known as a "high pole". The rule of thumb is that if the 50% retracement level holds then the primary bull trend will resume. If it is penetrated then the entire high pole will be retraced.

The 50% level is (1076+1888)/2 = $1482.

Unfortunately, a horizontal count target of $1320 is below $1482. Therefore, even if we are in a Primary Bull market and the price breaks below $1535, the high pole is likely to be fully retraced and, therefore, the vertical count move is likely to prevail. If the gold price falls below $1535, a target of $1109 per ounce will be eminently believable.

So the question arises: Given today's strong rise in the gold price, what is the probability that the $1535 level will be penetrated on the downside?

Well, the answer to this will depend on the probability that a descending right-angled triangle will break out to the upside. It could happen, but the probability is very low.

For the purposes of confirmation (or non-confirmation) let's have a look at what the ratio of gold shares prices/ gold price did today. Given that gold mining profits are highly leveraged to the gold price, if the market thinks that the gold price is about to explode upwards, then the share prices should be leading the gold price, and the ratio should be rising:

Silver Member

Visible on the chart is the major double bottom made in 1999 and 2001 at around $255 for gold. Since then gold has made three waves up (2 waves up and 1 down) and is in the process of making a fourth wave. The first correction (wave 2) was seen with the top in March 2008. The market bottomed in October 2008. On the point and figure chart gold formed what appeared to be a flag formation. A flag formation is a corrective pattern seen in bull and bear markets. In a bull market the flag would be pointed down as it was above. The breakout point was at $950 and had minimum objectives to $1,265. There was a 3.618 Fibonacci objective that could see the market reach to about $1,925. As it turns out that was about where the market topped.

The flag formation broke to the upside in February 2009 and topped out in September 2011. Since then the formation appears to be a pennant formation again another common corrective pattern seen in bull and bear markets. As with the bull flag formation, the bull pennant formation points downward as it should.

The above chart of gold suggests that 3 waves have been completed to the upside since the double bottom of 1999/2001 lows and the market is currently tracing out the 4th wave. In Elliot wave analysis a 5th wave should soon be getting underway. The 5th wave to the upside is often the longest and most spectacular one of them all. It should at least equal the first wave up which was $750. That could suggest a potential objective of $2,500 before the next major correction sets in. If the 5 waves up pattern is correct then that correction could be a significant one and correct the move up from $255.

Silver Member

Visible on the chart is the major double bottom made in 1999 and 2001 at around $255 for gold. Since then gold has made three waves up (2 waves up and 1 down) and is in the process of making a fourth wave. The first correction (wave 2) was seen with the top in March 2008. The market bottomed in October 2008. On the point and figure chart gold formed what appeared to be a flag formation. A flag formation is a corrective pattern seen in bull and bear markets. In a bull market the flag would be pointed down as it was above. The breakout point was at $950 and had minimum objectives to $1,265. There was a 3.618 Fibonacci objective that could see the market reach to about $1,925. As it turns out that was about where the market topped.

The flag formation broke to the upside in February 2009 and topped out in September 2011. Since then the formation appears to be a pennant formation again another common corrective pattern seen in bull and bear markets. As with the bull flag formation, the bull pennant formation points downward as it should.

The above chart of gold suggests that 3 waves have been completed to the upside since the double bottom of 1999/2001 lows and the market is currently tracing out the 4th wave. In Elliot wave analysis a 5th wave should soon be getting underway. The 5th wave to the upside is often the longest and most spectacular one of them all. It should at least equal the first wave up which was $750. That could suggest a potential objective of $2,500 before the next major correction sets in. If the 5 waves up pattern is correct then that correction could be a significant one and correct the move up from $255.

If you look at the rally from 850 in 2008, from 680 in 2008-2009 and from 1045 in 2010 are all quite heavy compared to the impulsive waves that later followed. This means those rallies are corrective, not impulsive.

We might have just finished wave 4 which is almost always a triangle, which brings wave 5, the strongest of them in gold.

Silver Member

Gold broke the major downward sloping trendline in the "Descending Triangle" pattern, see right hand side below. This does not turn gold from "Bearish to Bullish" in the weekly timeframe in my opinion. To me Gold is now "Neutral" on the weekly.

As long as gold stays above $1,650, I am favoring day-trades only to the long side on the smaller degree timeframes. Any bearish patterns that develop on a 30 min or 5 min chart will be ignored other than to look for failure. I have no issues being flat for the time being as price means nothing to me.

I have mentioned many times that I am eager to put on an intermediate to long term trade in gold and that I would not consider putting on one until the descending triangle is no longer in play, but that does not mean that I would put on a position in that instant.

The next quality consolidation pattern that develops on the daily timeframe that has a breakout to the upside may set the tone for the next longer term trend. Likewise a breakdown from the next consolidation pattern on the daily chart may be a rude awakening to those who are piling in and looking to hold on. I want to avoid this, because I do NOT believe I have strong enough probabilities yet. A loss would not be welcomed here by me. The larger the degree timeframe the wider the stop must be.

I have gotten many emails since announcing a new service, and I will be sending out another group email with another update in the next few days.

Silver Member

So, we will be watching which way goeth gold in the short term, up 4% or down 11%, before the next big moves predicted by the charts take place. At present we do not expect gold to plummet from a bearish triple top pattern. The fundamentals support high gold prices for the foreseeable future. However, we shall stay vigilant as we tip toe past the triple top cemetery.

2. When everything around you becomes more complex, you can try to employ more complexity yourself, to compete, or step back from it. High-frequency trading (HFT) is a very complex approach to markets.

3. Computer programs are used to try to make just pennies or a few dollars on a highly leveraged futures contract trade.

4. HFT traders take on a lot of risk, to make just a small amount of reward. If you don’t have any HFT programs in your trading arsenal, perhaps a much simpler approach to the gold market is required.

5. Please click here now. You are looking at the daily chart for gold. There is substantial horizontal support and resistance (HSR) in the $1540 and $1800 areas.

6. If I could give this chart a name, I would probably call it the “gold sandwich”. There is a lot of “filling” between the two pieces of “HSR $1540 and $1800 bread”.

7. You can use technical and fundamental analysis to guess where gold will move to next, between those two HSR lines. Unfortunately, that is what the HFT program traders are trying to do, and they are very good at their job.

8. Until gold rises above $1800, or declines to $1540, I would not place much risk capital into the gold market, regardless of whether you own a lot of gold, or only a little bit of it.

Silver Member

The US economy in November has beaten street expectations with services and factory orders beating street expectations. The rise in the US economy has resulted in reduction in net long positions in gold or profit taking whichever way one might assume. Silver is still firm on expectations that higher global growth next year will increase its demand in factories and elsewhere. The US economy will be the key for gold and silver and if there are any signs that the US will not be able to maintain the current rate of growth then gold, silver and other safe havens will zoom. Base metals will also track global economy and should remain firm.

Buying June 2013 call options for a strike price of $2125 could be one of the better investment strategies. We need to wait for a larger silver price fall to buy June call options. Lots of economic data are there from Europe and USA are there today and tomorrow plus there is the last central bank meetings of the year in Europe. There can be a directional change in commodity markets and the US dollar. Trade carefully.

COMEX TECHNICAL VIEW

COMEX GOLD FEBRUARY 2013 – current price $1694.80

200 day moving average at $1665 is the key support and gold needs to trade over the 200 day MA to be in short term bullish zone.
There will be a technical break down below $1665 to $1585

Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Prepared by Chintan Karnani

Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.

Silver Member

What most gold investors have done is to shrug off the probability that they may have their gold confiscated by their government, ‘in the interests of national financial security’. Confiscation is far more than just an event that will hurt individuals. It will hurt institutions (who are allowed to own gold) and change the world’s monetary system significantly.

Importantly, Central Banks and the Authorities possibly will not wait for the monetary system to crash before acting to ensure they have enough gold to keep the monetary system working. They will act well ahead of that time to make sure they avoid a collapse and attempt to engineer the event so as to catch gold investors by surprise, removing their chances of making any contingency plans. With their prime objective being to shore up confidence in the monetary and banking system, they could not afford to signal the market about their intentions beforehand. We are not just talking about the U.S.A. but many other countries that may precede or follow the United States in these acts.

The trouble is that the gold they ‘acquire’ may be yours. Wisdom demands that the banking crises, which have been occurring since 2007, do not happen again because this time around they may well collapse. Prudence demands that investors don’t take that risk but act before it is too late. The risks of not guarding against this eventuality are enormous; the rewards of guarding against it are massive. If it doesn’t happen, then you will lose little if anything. If confiscation does happen, then you lose a lot. It’s a matter of risk and reward.

Silver Member

Note that $1642 was also the 61.8% retracement level as well as the point where waves A and C would have been equal. That target of $1642 was not achieved, the lowest PM fix being $1650 on Dec 20, 2012. There was a slightly lower morning fix the next day, but there is enough evidence when combined with the Comex gold chart to conclude that the correction from $1797 has been completed.

Obviously a decline to below $1636 would render this analysis valueless and we would have to reconsider the situation. The PM fix on Jan 2, 2013 was $1693, so there is already some upward movement on the scale that one should now expect.

Once $1800 is taken out on the upside, the gold chart will look tremendous. A beautiful “cup and handle” base would then provide strong support for a vigorous upward climb in the precious metal. At this stage there is no reason to abandon the rough target of $4500 for this coming upward wave. Once we have the next upleg above $1800 in place, it will be possible to start refining this target.

Silver Member

Demand for gold is likely to rise as the world heads towards a multi-currency reserve system under the impact of uncertainty about the stability of the dollar and the euro, the main official assets held by central banks and sovereign funds. This is the conclusion of a wide-ranging analysis of the world monetary system by Official Monetary and Financial Institutions Forum, (OMFIF), the global monetary think-tank, in a report commissioned by the World Gold Council, the gold industry’s market development body.

A report commissioned by the World Gold Council for the Official Monetary and Financial Institutions Forum in London, written by the chairman of the forum's advisory board, Meghnad Desai, more or less acknowledges what we've never seen the gold council acknowledge, the most important aspect of gold's place in the international financial system -- that is, that there is a war against gold.

"Most crucial with respect to the role of gold," Desai writes in his introduction, "the previously dominant Western economies have attempted to dismantle the yellow metal's monetary role, and -- for a variety of reasons -- this has comprehensively failed."

Presumably Desai says "Western economies" because to speak plainly -- to say "Western governments" or "Western central banks" -- would get a little too close to an impolitic truth about surreptitious policy. As Chesterton wrote a hundred years ago, "As is common in most modern discussions, the unmentionable thing is the pivot of the whole discussion."

Observers of the gold market are not likely to find much new or incisive in the remainder of Desai's report. Mainly it notes the flow of gold from West to East and China's declining to provide timely accounting of its gold acquisitions lest the West awaken to its impoverishment.

But small progress seems to be the only kind likely to come from the World Gold Council, so gold's friends may be glad of it. Maybe in another 20 or 30 years, if only once gold has been safely revalued, the council will acknowledge the many public records of official gold market manipulation compiled by GATA here:

I am sure distrust for the US government, or more likely, responding to the German voter’s distrust is among their concerns. But, I doubt that this is the primary motivation. The Bundesbank is not acting as if they are in any hurry, planning to have the gold moved over a period of 8 years (yes, I know, it all “fits”, the delay is because the Fed hasn’t got the gold, etc.) A lot can and will happen in 8 years (including the end of the current monetary system). The distrust theory has to answer: why would Germany leave 1,200 tonnes of gold in New York and 447 tonnes in London?

As a side note, if distrust grows to the point where a major government cannot trust another major government with $2.4B worth of gold, then there are some negative consequences. The gold market will not be the greatest of them, as the world experiences a collapse in trade, borders are closed to the movement of (peaceful) people, goods, and money, and the world in general moves towards world war and the possibility of a new dark age.

Some have declared that German’s gold withdrawal is a “game changer”. The game will change sooner or later, and gold will be used again as money. In this sense, German’s move is not a game-changer at all. They are just moving metal from one central bank vault to another. They are doing nothing to change the paper game into a gold game. They are not helping gold to circulate.

In any case, I don’t think this is what most pundits mean when they say, “game changer”. I think they mean the price will rise sharply. This follows from the belief that the Federal Reserve has already sold this gold, perhaps multiple times over. If this were true, then it would be obvious why Germany would want its gold back, while it is still possible to get it back. This would force the Fed to buy it back. This would cause the price to rise.

Silver Member

Of course the Fed has no need to borrow dollars, so if it leases gold it must be for another reason. I can think of two. First, the Fed might want to remove liquidity from the banking system (though not in the post-2008 world!). Second, the Fed might accommodate the case of a bank with a profitable gold arbitrage opportunity. There are several potential candidates, but one that comes to mind is temporary gold backwardation (http://keithweiner.posterous.com/temporary-backwardation-the-path-forward-from). In this case, the Fed leases gold to a bank. The bank sells the gold in the spot market, and simultaneously buys a future. The bank ends with the same gold bar and pockets a spread. It returns the gold to the Fed and even gets a little interest on the dollars it lent against the Fed’s gold collateral.

While this might have been occurring intermittently since December 2008, there is not much of a backwardation today in the February contract (around 0.1% annualized). And in any case, a lease for this purpose would be a short-term lease as there has not been any backwardation in long-dated futures, only the expiring month (less than 60 days).

Moving 300 tonnes of gold from New York to Frankfurt will be a non-event in the gold market in itself. However, there could be a large and unpredictable change if the gold-buying public sees this as a reason to increase their distrust of the system and runs to their nearest coin shop to load up.

Silver Member

For a long time America has been twisting the arm of other countries, including the U.K. and Switzerland, making them sell hundreds of tons of central bank gold, while America was not selling one ounce. “Do as I say, not as I do!” During all this time Germany was not selling either. The appearance was maintained that this decision was made in Germany. It wasn’t; rather, it has the mark “made in U.S.A.” German gold is the last defense of the dollar. By now practically all central banks ignore the siren song from America. From sellers they have become buyers of gold. According to the American master plan Germany is the last fort of the crumbling global fiat money system. Germany will not defect: that is the purpose of keeping American troops on German soil. Germany will dutifully do the job of feeding the futures market with gold in an effort to fend off permanent backwardation. The repatriation of a part of the German gold reserve is a trial balloon. If markets get scared and panic selling occurs before the Bundesbank starts selling, so much the better. But if false-carding fails and the world-wide march of gold into private hoards continues unabated, then let the Bundesbank, not the Fed, bleed gold. America’s gold must be spared at all hazards.

Silver Member

On gold’s 8-month chart we can see that the 4-day rally into last Tuesday’s close resulted in it rising too far too fast, given its prior downtrend. This was the reason it dropped back down during the rest of the week for a retest of support. However, bears started to lose control on Friday, evidenced by a “spinning top” candlestick appearing on the chart. When such a candlestick appears on a chart after a drop, it frequently portends a rally. As we can see gold is still deeply oversold on its MACD indicator and very near the bottom of an intermediate downtrend channel.

Silver Member

You can throw all these technical indicators out or choose to support your own case with them. Take a look at the chart and indicators for Crude during the post Katrina run to $140. The market was pinned overbought for the last 60 bucks up. If we break support near $1480 Gold the next stop might be $1300. Under that I don't want to even look. Sentiment however does support a rally. Hope I am not holding expensive doorstops and heirlooms.

Silver Member

It is already answered in this thread, Irregular correction is where reactive wave B make new high than the impulsive wave. So gold went to 1920, after reacting to 1702 from 1912. Here 1920 was a correction rather than a new high.